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Retirement income ‘playing catch up’ decade after financial crisis

Written by: Paloma Kubiak
People planning to retire this year expect to live on an average annual income of £18,100, which is less than the peak seen nearly a decade ago in 2008.

Prudential’s ‘Class of 2017’ report which looks into the financial plans of people geared to retire in the year ahead, shows this year’s retirees expect an income £400 more that those who gave up work in 2016.

The expected retirement incomes have now risen consistently since 2013 when they hit a low of £15,300.

However, this year’s retirees earning £18,100 are still a little way off the 2008 peak of £18,700.

The research, now in its 10th year, has taken account of some of the biggest pension changes and Prudential said there are signs these ongoing changes may be impacting retirees’ confidence about the future.

Nearly half (45%) of people planning to retire in 2017 said they feel they’re either not financially well prepared for retirement, or they’re are unsure about their preparations.

Kirsty Anderson, a retirement income expert at Prudential, said: “The continued growth in retirement incomes is something that I’m sure will be welcomed by everyone planning to retire this year. However, it is striking that the expected income of people who retired at the height of the financial crisis was higher than for those who are giving up work in 2017 and still playing catch up 10 years later.

“After a decade of unprecedented changes to the rules around pensions, we are also seeing a degree of uncertainty from retirees about whether the amount they’ve saved will leave them financially prepared for the years ahead. For many people, the value of a consultation with a professional financial adviser, both when saving into a pension and when considering the income options at retirement, should not be underestimated.”

Anderson said that today, as in 2008, the message for people looking to make their retirement as financially comfortable as possible is to try to save as much as they can from as early as possible in their working lives.

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